The morning news. [volume] (Savannah, Ga.) 1887-1900, 1887-07-24
FURRY IN THE STOCK EXCHANGE
What the Progressive Element is Try
ing to Bring About.


What the Progressive Element is Try
ing to Bring About.
New York July 23-The Stock Exchange
| is frightened 1t may seem strange that an
institution which has always assumed to be
| invunerable should be frightened, but it is
merely big fowl of the air at which the
king bird is picking with such success as to
| threaten its life The king bird is the
| Consolidated Exchange. There is grave
consultation among the members of the
older body as to what shall be done. They
regard themselves as noble old Romans
threatened by "a horde of Cloths, Huns and
Vandals led by financial Alarics, Attilas
and Genserics, and they have appointed a
committee to inquire into the causes Of the
| decadence of the Exchange and its business.
| A well-known member of the Exchange
said to me in discussing the question: The
| conditions of stock speculation have
changed very materially within the last ten
years, and the Stock Exchange has not
adapted its rules and methods of business to
these changes. There are the encroachments
of the Consolidated Exchanges with its
! commissions of one-sixteenth each way, and
the weekly instead of daily settlements, an
idea which was adopted by the new Chicago
Board of Trade Stock Exchange There is
the competition of the bucket shops. There
are 5000 of these in the country and they
do business of at least 81 100000 shares II
day There is the more rapid spread of
business intelligence, which tends to narrow
the fluctuations and thus check arbitrage
trading; the ticker and the telephone and
| the rapid development of the telegraph
| system have worked a revolution in the
methods of disseminating business news
The Stock Exchange commissions should be
| reduced to one ixteenth of per cent. each
| way, and some means of reducing interest
charges should be devised. As the rules now
stand a firm buying stocks is obliged to send
a certified check in payment for them the
next morning. The transactions are so
large that no firm has capital enough to
handle the stocks as fast as they come in
| and this leads to overcertification of checks
| This at one time ran to such an extreme
that Congress passed a law making it n
penal offenSe for bank to 0yercertify a
firms account, but the banks got around
the law by stamping the checks Accepted. "
| With fortnightly settlements such as they
have on the London Stock Exchange, less
capital would be required in the stock
| brokerage business, the firm could he pro
tected by calling margins as needed and the
first margin, instead OF or 10 per cent, as
now, need not in many cases be more than
or per cent, and this would cut into the
bucket shops Reducing the commission
CUdlRCS Oilt-ilill NOuNi VI IculSS SiloO htip
the Stock Exchange, and by the fortnightly
settlement system there would naturally
| be no interest charges, since the stocks
would not be paid for until the usual set
Ting day"
This gives q rough idea of what the more
progressive element on the Stock Exchange
are trying to bring about. There have
been many consultations, many conflicting
theories have been advanced and the COM
| mlttee is still at work. Some of the best
| known brokers in Wall street are actively
interested in the Slater and believe IN
| revising the rules and methods to meet the
demands of the times. They say they do
not want Clearing House for stock bust
ness, but would establish what they term an
auditing department fnthe Stock Exchange,
and names could he FURNISHED to trade
with whom they could finally adjust their
| transactions so that bhe deliveries of stocks
could be made directly between the trading
members In the gold panic of 1869 some
gold operators were ruined because they put
their gold il the clearing house and could
not get it out SO the stock brokers object
to a clearing house in the strict sense. One
advantage of the weekly or fortnightly
settlement system is that it tends to remove
the possibility of panicS growing out of a
| squeeze in money.
One of the facts obvious to those who
| have given the matter attention is that the
| fluctuations IN STOCKS are much smaller UpGQ
formerly. From 1879 to 1882 they averaged
IA to 2 per cent day, whereas within the
last few years they have narrowed down to
an average of p to per cent, a day. This
renders it difficult for the average operator
to make any money and arbitrage houses
trading between New York and London,
Paris, Frankfort and Amsterdam, and also
in this country between New y ork and
| Chicago, Boston and Philadelphia, complain
of the steadily narrowing market. The big
| buying on the bucket shops, of course,
counts for nothing; it has no effect on the
market, but if the same buying were trans
| ferred to the legitimate Stock Exchange it
might have a very decided influence on the
fluctuations. As it is, the bucket shop
keepers simply "copper" their customers,
| and one of the obstacles to a return of bull
markets is that every now and then the
| bucket shop keepers give orders to sell ten
| or twenty thousand shares in order to beat
| down prices and swndle their customers
out of their margins. The refusal Of the
| Stock Exchange to revise its rules and at
| tack the bucket shops in the only really
effective way has given the Consolidated
| Exchange and its 1900 members great
| advantage, and now the Okler body is so
| thoroughly alarmed that it is trying TO
| struggle out of the quagmlre into which its
| own arrogance and Obtuseness have thrown
| it, Some of the larger firms on the Stock
| Exchange oppose any chance in direction
indicated because 1t would give the smaller
| houses an equal chance with themselves, but
| it is reasonably certain that the Exchange
as body will take some remedial measures
at no distant day.
OSCAR WILLoUGHBY RIGGS.